Labor Market Responses Research Articles

Impact of Employment De-Standardisation on its Quality: Reflections on Academic Discussion at the VI St. Petersburg International Labour Forum

The transformation of traditional models and forms of employment raises questions both about the impact of such processes on the quality of employment and about the mainstreaming of these issues into contemporary academic discourse. The purpose of the article is to analyze and assess the impact of de-standardisation of employment on its quality based on the materials - digests of participants' presentations - of the academic discussion held as part of the VI St. Petersburg International Labour Forum in March 2022. During the discussion, employment quality was at the intersection of approaches and principles shaping it (decent work, work-life balance); megatrends ((anti)globalisation of economy, digitalisation, population ageing); macro development conditions (quality of growth, quality of life of population); short- and medium-term consequences of the COVID-19 pandemic; initial labour market response to geopolitical tensions, significantly increased in 2022; and employment precarisation. The variety of angles in this discussion enabled the authors to form a general idea of the current debate on the quality of employment and its perspectives. Objective of the article is employment quality. Subject is employment de-standardization, understood as a shift of employment from the model of direct relations between the employee and the employer on the terms of a standard employment contract with appropriate rights and guarantees. The first result of the article is that it captures the most prominent issues of the recent academic debate on employment quality. The second result is the conclusion about the fragmented theoretical concepts of employment quality in Russia, limiting their application in public policies. The third resultis recommendations on the content of systemic approaches to measuring employment quality to assess its impact on living standards and include in the system of macroeconomic development indicators.

Scaring or Scarring? Labor Market Effects of Criminal Victimization

Little is known about the costs of crime to victims. We use unique and detailed register data on victimizations and monthly labor market outcomes from the Netherlands and estimate event study designs to assess short- and long-term effects of criminal victimization. Across offenses, both males and females experience significant decreases in earnings (up to −12.9%) and increases in benefit receipt (up to +6%) after victimization. The negative labor market responses are lasting (up to 4 years) and accompanied by shorter-lived responses in health expenditure. Heterogeneity results suggest that most groups of victims, including the noninjured, suffer nontrivial losses.

The impact of housing subsidy cuts on the labour market outcomes of claimants: Evidence from England

Housing subsidies are aimed at helping low-income individuals afford appropriate housing, but are costly to offer and, in the view of some experts and policy makers, reduce incentives for claimants to participate in the labour market. This paper investigates the labour market impacts of recent housing subsidy cuts in England that were aimed at encouraging labour market participation and increasing work effort among claimants. I utilise variation in exposure to the subsidy cuts within a difference-in-differences framework and find limited evidence at the individual-level that claimants increased employment and labour force participation in response to the subsidy cuts. Nonetheless, these findings lack robustness and aggregate-level evidence suggests that the subsidy cuts did not succeed in encouraging employment or participation among claimants. Overall, my results show that labour market responses to the subsidy cuts were likely preempted by a strong mobility response, whereby claimants moved into other parts of the rental market to maintain subsidy coverage.

Determinants of Disparities in Early COVID-19 Job Losses.

This study examines the sociodemographic divide in early labor market responses to the U.S. COVID-19 epidemic and associated policies, benchmarked against two previous recessions. Monthly Current Population Survey (CPS) data show greater declines in employment in April and May 2020 (relative to February) for Hispanic individuals, younger workers, and those with a high school diploma or some college. Between April and May, the demographic subgroups considered regained some employment. Reemployment in May was broadly proportional to the employment drop that occurred through April, except for Black individuals, who experienced a smaller rebound. Compared to the 2001 recession and the Great Recession, employment losses in the early COVID-19 recession were smaller for groups with low or high (vs. medium) education. We show that job loss was greater in occupations that require more interpersonal contact and that cannot be performed remotely, and that pre-COVID-19 sorting of workers into occupations and industries along demographic lines can explain a sizable portion of the demographic gaps in new unemployment. For example, while women suffered more job losses than men, their disproportionate pre-epidemic sorting into occupations compatible with remote work shielded them from even larger employment losses. However, substantial gaps in employment losses across groups cannot be explained by socioeconomic differences. We consider policy lessons and future research needs regarding the early labor market implications of the COVID-19 crisis.

Firing discrimination: Selective labor market responses of firms during the COVID-19 economic crisis.

The speed of the economic downturn in the wake of the COVID-19 pandemic has been exceptional, causing mass layoffs—in Germany up to 30% of the workforce in some industries. Economic rationale suggests that the decision on which workers are fired should depend on productivity-related individual factors. However, from hiring situations we know that discrimination—i.e., decisions driven by characteristics unrelated to productivity—is widespread in Western labor markets. Drawing on representative survey data on forced layoffs and short-time work collected in Germany between April and December 2020, this study highlights that discrimination against immigrants is also present in firing situations. The analysis shows that employees with a migration background are significantly more likely to lose their job than native workers when otherwise healthy firms are unexpectedly forced to let go of part of their workforce, while firms make more efforts to substitute firing with short-time working schemes for their native workers. Adjusting for detailed job-related characteristics shows that the findings are unlikely to be driven by systematic differences in productivity between migrants and natives. Moreover, using industry-specific variation in the extent of the economic downturn, I demonstrate that layoff probabilities hardly differ across the less affected industries, but that the gap between migrants and natives increases with the magnitude of the shock. In the hardest-hit industries, job loss probability among migrants is three times higher than among natives. This confirms the hypothesis that firing discrimination puts additional pressure on the immigrant workforce in times of crisis.

Women\u2019s Labor Market Responses to Their Partners\u2019 Unemployment and Low-Pay Employment

Using bivariate random-effects probit estimation on data from the German Socio-Economic Panel we show that women respond to their partners’ unemployment with an increase in labor market participation, which also leads to an increase in their employment probability. Our analysis considers within and between effects separately, revealing differences in the relationships between women’s labor market statuses and their partners’ unemployment in the previous period (within effect) and their partners’ overall probability of being unemployed (between effect). Furthermore, we contribute to the literature by demonstrating that a partner’s employment in a low-paid job has an effect on women’s labor market choices and outcomes similar to that of his unemployment.

The effect of parental job loss on youth transition to employment in Turkey

AbstractThis article analyses the impact of household head's involuntary job loss on young person's (15–24 years old) likelihood to transition from non‐employment to employment. We construct twelve two‐year pseudo‐panels based on previous year's labour market outcomes using Turkish Household Labor Force Surveys (THLFS) from 2005 to 2016 and then pool the twelve pseudo‐panels for analysis. We examine youth's labour market responses according to education levels and gender. We show that a female with at least a high school degree is about 8.7 percentage points more likely to transition to from non‐employment to employment in the group where the head experienced an unexpected job loss than a female in the group where the head remained employed. Furthermore, for females, the probability of transitioning to employment increases by education level. For males, although we find positive and statistically significant effect of head's job loss on the transition probability, we do not find any differences according to education level.

Job Search Behavior Among the Employed and Non‐Employed

We develop a unique survey that focuses on the job search behavior of individuals regardless of their labor force status and field it annually starting in 2013. We use our survey to study the relationship between search effort and outcomes for the employed and non‐employed. Three important facts stand out: (1) on‐the‐job search is pervasive, and is more intense at the lower rungs of the job ladder; (2) the employed are at least three times more effective than the unemployed in job search; and (3) the employed receive better job offers than the unemployed. We set up a general equilibrium model of on‐the‐job search with endogenous search effort, calibrate it to fit our new facts, and find that the search effort of the employed is highly elastic. We show that search effort substantially amplifies labor market responses to productivity shocks over the business cycle.

Fertility and Labor Market Responses to Reductions in Mortality

Fertility and Labor Market Responses to Reductions in Mortality

Motherhood and the Allocation of Talent

In this paper we show that motherhood triggers changes in the allocation of talent in the labor market besides the well-known effects on gender gaps in employment and earnings. We use an event study approach with retrospective data for 29 countries drawn from SHARE to assess the labor market responses to motherhood across groups with different educational attainment, math ability by the age of 10, and personality traits. We find that while even the most talented women— both in absolute terms and relative to their husbands—leave the labor market or uptake part-time jobs after the birth of the first child, all men, including the least talented, stay employed. We also find that motherhood induces a negative selection of talents into self-employment. Overall, our results suggest relevant changes in the allocation of talent caused by gender differences in nonmarket responsibilities that can have sizable impacts on aggregate market productivity. We also show that the size of labor market responses to motherhood are larger in societies with more conservative social-norms or with weaker policies regarding work-life balance.

Racial Disparities in Labor Market Responses to the EITC

Racial Disparities in Labor Market Responses to the EITC

The Importance of Labour Market Responses, Competitiveness Impacts, and Revenue Recycling in Determining the Political Economy Costs of Broad Carbon Taxation in the UK

The Importance of Labour Market Responses, Competitiveness Impacts, and Revenue Recycling in Determining the Political Economy Costs of Broad Carbon Taxation in the UK

Labour law without labour law: The United Kingdom’s labour market response to COVID-19

The United Kingdom’s response to the COVID-19 crisis with respect to labour law and protecting workers and working relationships had several idiosyncratic aspects that distinguished it from ostensibly similar attempts to protect jobs during the pandemic. The UK approach was striking, in comparative terms, due to its lack of engagement with any process of social dialogue at the national, sectoral, and enterprise levels. The structures of worker representation of this type are so weak in the UK, due in part to a particular tradition of collective bargaining, that any such involvement would possibly not even have been feasible given the short time frame without the creation of new ad hoc infrastructure. While most other advanced economies made use of relatively familiar methods of labour law, alongside macroeconomic intervention and state support, the UK’s response was largely devoid of any traditional labour law content, and did not make use of labour law categories or methods, in particular the placing of obligations on the employer. this meant that the UK’s approach reflected a form of “labour market” regulation which aimed, unusually, at solidifying rather than deregulating the labour market. While this approach comes with many significant complexities and risks, it provides a potential model for future interventions which do not rely on sometimes tired or outdated labour law categories.

Hit Hard but Recover Slowly: The Asymmetric Effects of Social Distancing Policies on the US Labor Market

This study employs a difference-in-differences approach to examine the US labor market response to two widely used social distancing policies, stay-at-home (SAH) order and non-essential business closure, with special attention paid to the asymmetric effect of the policies’ imposition and lifting. Exploiting the variation across states and time, we find that state employment rates declined by 4.3% and 1.9% for the two policies respectively, within one month of the enaction of social distancing policies, but the recovery was slower after the policies were removed. We also highlight that the low-income group suffered the highest employment rate drop from the SAH enaction while presenting the mildest rebound. Self-employed workers were more affected by the policy impositions but recovered slightly faster than wage earners. Our results suggest persistent efforts must be made after the pandemic, especially for more vulnerable groups in the labor market.

Costs and benefits of trade shocks: Evidence from Chilean local labor markets

We study Chile’s labor market responses to trade shocks during 1996–2006, exploiting spatial and time variations in trade exposure arising from initial differences in industry specialization across local labor markets and the evolution of shocks across industries. We take advantage of China’s supply and demand’s worldwide shocks to instrument for Chinese import competition and demand for Chilean exports. Our main finding is that increasing manufacturing import competition implied a significant rise in labor informality in more exposed local markets, especially among young and unskilled workers. These groups also suffered significant relative wage losses. Meanwhile, locations that benefited most from the increased demand for primary products experienced a relative increase in employment, particularly among young individuals, and reallocation from self-employment towards salaried jobs in the formal sector, along with relative wage gains among old-age workers. Interestingly, these areas experienced a smaller increase in tertiary education enrollment rates than less exposed areas.

The Trade‐Off Between Work and Education: Evidence from Public Transportation Penetration to Arab Towns in Israel

AbstractDisadvantaged communities are often geographically segregated from employment and higher education opportunities. Increasing access can entail substantial welfare gains, but this can also affect the trade‐off faced by young adults between investing in higher education and working for pay. We evaluate the introduction of bus services to Arab towns in Israel, which substantially and differentially increased access either to work only or to work and higher education opportunities among a disadvantaged population. Exploiting the variation that different bus line connections created in the cost of accessing higher education institutions, we find that young adult male responses are consistent with a trade‐off between investing in higher education and working for pay. For females, our results are less clear‐cut and while there is evidence of responses in terms of the probability of currently studying, we do not observe sufficiently concise labor market responses. Our results demonstrate the importance of accounting for potential reductions in educational attainment when expanding work opportunities to disadvantaged communities.

Different firm responses to the COVID-19 pandemic shocks: machine-learning evidence on the Vietnamese labor market

PurposeThis paper aims to identify the disproportionate impacts of the COVID-19 pandemic on labor markets.Design/methodology/approachThe authors conduct a large-scale survey on 16,000 firms from 82 industries in Ho Chi Minh City, Vietnam, and analyze the data set by using different machine-learning methods.FindingsFirst, job loss and reduction in state-owned enterprises have been significantly larger than in other types of organizations. Second, employees of foreign direct investment enterprises suffer a significantly lower labor income than those of other groups. Third, the adverse effects of the COVID-19 pandemic on the labor market are heterogeneous across industries and geographies. Finally, firms with high revenue in 2019 are more likely to adopt preventive measures, including the reduction of labor forces. The authors also find a significant correlation between firms' revenue and labor reduction as traditional econometrics and machine-learning techniques suggest.Originality/valueThis study has two main policy implications. First, although government support through taxes has been provided, the authors highlight evidence that there may be some additional benefit from targeting firms that have characteristics associated with layoffs or other negative labor responses. Second, the authors provide information that shows which firm characteristics are associated with particular labor market responses such as layoffs, which may help target stimulus packages. Although the COVID-19 pandemic affects most industries and occupations, heterogeneous firm responses suggest that there could be several varieties of targeted policies-targeting firms that are likely to reduce labor forces or firms likely to face reduced revenue. In this paper, the authors outline several industries and firm characteristics which appear to more directly be reducing employee counts or having negative labor responses which may lead to more cost–effect stimulus.

Lowering Standards to Wed? Spouse Quality, Marriage, and Labor Market Responses to the Gender Wage Gap

Abstract This paper examines the effect of the female-to-male wage ratio, “relative wage,” on women's spouse quality, marriage, and labor supply over three decades. Exploiting task-based demand shifts as a shock to relative pay, I find that a higher relative wage (a) increases the quality of women's mates, as measured by higher spousal education; (b) reduces marriage without substitution to cohabitation; and (c) raises women's hours of work. These effects are consistent with a model in which a higher relative wage increases the minimum nonpecuniary benefits (“quality”) women require from a spouse and therefore reduce marriage among low-quality husbands.

COVID-19 impact on SADC labour markets: Evidence from high-frequency data and other sources.

We assess the impact of the coronavirus disease 2019 (COVID‐19) pandemic on the labour markets and economies of 16 SADC member states using a qualitative risk assessment on the basis of high‐frequency Google Mobility data, monthly commodity price data, annual national accounts, and households survey labour market data. Our work highlights the ways in which these complementary datasets can be used by economists to conduct near real‐time macroeconomic surveillance work covering labour market responses to macroeconomic shocks, including for seemingly information scarce African economies. We find that Angola, South Africa and Zimbabwe are at greatest risk across several labour market dimensions from the COVID‐19 shock, followed by a second group of countries consisting of Comoros, DRC, Madagascar and Mauritius. Angola faces relatively less general employment risk than South Africa and Zimbabwe due to more muted decreases in mobility, though faces large pressure in its primary sector. These countries all face high risk in their youth populations, with Angola and Zimbabwe seeing high risks for women. South Africa faces more sector‐specific risks in their secondary and tertiary sectors, as does Mauritius. Comoros, DRC and Madagascar all face high risks of employment loss for women and youth, with Comoros and Mauritius facing severe general employment risks.

International labor market competition and wives’ labor supply responses

We examine how the 2004 European Union (EU) enlargement to Eastern European countries affected the employment, earnings and share of home production among workers employed in the Building and Construction industry and their wives. We use licensing requirements to divide workers into two groups who are more and less exposed to labor market competition. We find that exposed workers experience a fall in labor earnings relative to sheltered workers after the EU enlargement. Increased wife labor supply and earnings compensate around one third of the loss. We do not find a similar change in the division of labor in home production measured by the share of parental leave. Having small children does not constrain the labor market responses of the wives.